Thursday, 1 March 2018
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018, Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2018; Second Reading
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2018 give purpose to the government's announcements that were made in the 2017-18 budget regarding the foreign resident capital gains tax regime and how it applies to housing and other measures that they claim deal with housing affordability. In relation to the capital gains tax changes for foreign residents, this particular set of bills seeks to remove the entitlement to the capital gains tax main residence exemption for foreign residents and modify the foreign resident CGT regime to clarify that, for the purpose of determining whether an entity's underlying value is principally derived from taxable Australian real property, the principal asset test is applied on an associated inclusive basis. There was concern that this measure would remove entitlement to the capital gains tax main resident exemption for foreign residents who are New Zealanders and that it would affect those constituencies. However, the clarification that has been specified to state that Australian tax residents can access the exemption means that those constituencies are likely not impacted. But Labor believe that this is an issue that should be aired and clarified during a Senate inquiry process, and we've recommended that these bills go off to a Senate inquiry to clarify their operation.
The second element of the bills relates to the reconciliation payments for near-new dwelling exemption certificates. They are made to developers who sell dwellings to foreign persons under a near-new dwelling exemption certificate. This particular type of certificate was introduced in 2017 to allow developers the flexibility to sell near-new dwellings that have previously failed to settle at an auction or during a prior sale period to foreign persons. Consistent with the process of payment under the near-new dwelling certificates, the bills introduce a reconciliation payment for the near-new dwelling certificate exemptions by which developers pay additional fees for each near-new dwelling sold to a foreign person under these certificates.
The final element of the bills is capital gains tax incentives for investments in affordable housing. We all know that we need to do much more as a nation to encourage developers to increase the supply of affordable housing if we're going to take pressure off house prices and make housing more available and affordable, particularly for low-income families. From 1 January 2018, an additional 10 percentage points capital gains tax discount will be provided if a CGT event occurs to an ownership interest in residential premises used to provide affordable housing. The additional capital gains tax discount applies to investments by individuals directly in affordable housing or investments in affordable housing by individuals through trusts, including managed investment trusts.
These bills are part of the government's so-called attempts to improve housing affordability in Australia. But, time after time, economists and experts who work in the housing field have identified that the major driver of pressure on house prices, particularly in the Sydney, Melbourne and Brisbane markets, has been the overly generous tax concessions that exist in Australia around the sale of and purchase of investment properties. I speak of course of negative gearing, the ability for people buying investment properties to deduct for taxation purposes the interest payments that they make when there is a loss, and of the discount that's applied for capital gains tax once the property is sold. The capital gains discount is in the value of 50 per cent.
These are the most generous tax concessions in the world. As a result, Australia's capital cities have, on the whole, probably the highest cost of housing of any nation in the world, and plenty of evidence exists to say that there is a direct relationship between those two phenomena. Yet none of what this government has done over the course of the last couple of years and none of what it is proposing deals with that core problem in our housing market—the overly generous tax concessions that exist. Not only are they overly generous, they benefit those who are well off. The benefit of these tax concessions overwhelmingly goes to people who are in higher income brackets. When it comes to the capital gains tax discount, it was recently reported that that has actually increased: close to 65 to 70 per cent of the benefit goes to the top income tax bracket earners in this country. The same applies to negative gearing. I think 50 per cent of the benefit of negative gearing goes to the top 10 per cent of income earners in this country. That's unfair and it's unsustainable. At the moment, if you're a first-home buyer, seeking to buy your first property and you go along to an auction on a Saturday, you're competing against someone who might be going to invest in their seventh or eighth investment property and who knows that they're going to get a leg up from the government and access to that tax concession and so will have an advantage over you in bidding for that property. First home buyers get absolutely nothing. They get very, very little support from the government at all.
The government recently introduced a reform to superannuation to ensure that people can save up to $30,000 through their superannuation fund on a concessional tax basis to save for their first property. But the problem with that is that $30,000 doesn't buy you a window pane in the area that I represent. It's basically useless for most people. There is plenty of evidence to suggest that these schemes that promote putting more money in people's pockets so they can buy housing actually push up the cost rather than taking the heat off. That's all it will do. So what we have seen with this government is an abject failure to listen to the experts; to understand what is going on on the ground; to listen to the Australian people, importantly; and to take action on negative gearing and capital gains tax discounts.
It's only the Labor Party that has had the courage and the guts to be honest with the Australian people and say, yes, we're going to tackle this difficult issue. Two years ago we announced a sensible policy. The housing market at the moment is akin to a pot of boiling water; our policy will turn the temperature on the stove down a bit so that some of the heat comes out of the housing market. It's not going to see house prices reduce. It's not going to see house prices fall, as the Prime Minister said, but also it's not going to see house prices go through the roof, as the minister for revenue has said, which is another example of the fact that this government doesn't know what it is doing. The Prime Minister says that house prices are going to go through the floor and the minister for revenue says they're going to go through the roof. They don't even know what is going on in the housing market when it comes to this issue. Our policy will take pressure off. It will do this by restricting negative gearing to new investment properties only. We're talking about new housing stock, off-the-plan developments. If a developer builds a new project, particularly unit developments, then you will be able to invest in that and negatively gear it, but if it's an existing house or an existing unit—and, let's face it, most new home buyers come in at the bottom of the market because they don't have as much funds available, and they buy existing housing stock. Very few first home buyers buy something that's brand new, that's off the plan. They'll buy something that's existing housing. So you're taking that competition away from the first-home-buyers market by removing that incentive, that tax concession, that exists for people who may wish to negatively gear, by restricting it to new housing development only.
We've had this policy independently costed and studied, and it's been looked at by a number of organisations. They've said that this policy will create 25,000 jobs in the housing market because you're going to see an encouragement to bring on new supply. There'll be an encouragement for people to build new housing because there's a taxation incentive around it. That will increase supply, which hopefully will take pressure off over the course of the years to come as well. It's a sensible policy.
Anyone who is currently in the system who is negatively gearing a property at the moment will not be affected at all. They will be grandfathered, so there will be no effect on people who are negatively gearing properties at the moment. They will continue to be able to do that until they sell the property. But at a point in time in the future, if Labor is elected, new developments will be the only ones for which negative gearing will be available, and that will take some of the heat out of the housing market.
The second element is the outrageous capital gains tax discount that exists for the sale of investment properties. At the moment, if you have an investment property, you negatively gear it during the life of that. When it starts to become positively geared—in other words, you don't make a loss on it anymore and you can't deduct the interest—a lot of people sell it. And what do you know? They sell it and they pay capital gains tax on that, but John Howard and Peter Costello introduced a 50 per cent discount, so they reduced the amount of tax that's paid on that by 50 per cent.
When they did that, it was unfunded in the budget. They didn't find a revenue source to fund this very generous tax outlay or tax concession that they were giving to investors in the property market. These were during the boom times, during the mining boom, and we were running healthy surpluses because the economy was ticking along quite nicely on the back of the resources boom. Yet the fiscal irresponsibility of that government is evident in the fact that they never found a funding source for that reduction in revenue from the budget from producing that 50 per cent capital gains tax discount, and we're all paying for it now. We're all paying for it in the budget deficit that we have, and we're all paying for it in the heat that's been brought into the housing market because of that very generous tax concession.
Labor have said that we'll remove some of that heat around this particular policy item by reducing that capital gains tax discount to 25 per cent rather than 50 per cent. That will, again, operate to ensure that investors don't get an advantage over first home buyers who are going along to auctions on a Saturday to try and buy their first home.
These are sensible reforms. They have been consulted on with the Australian public over a long period of time and with experts that work in this field. They've been developed in consultation with these people. They've been studied by independent bodies, fully costed and ticked off by the Parliamentary Budget Office as ones that create jobs, boost the housing supply and take the heat off house prices in this country. That is a sensible measure, and that is the Labor Party listening to the Australian people, in stark contrast to this government, which sticks its head in the sand and still remains the mate of developers in this country by refusing to act on capital gains tax discounts and outrageous negative-gearing tax concessions that exist in Australia, which are causing big pressure and heat in the housing market.
So, whilst these measures are welcomed, they don't go far enough. They don't deal with the core of the problem. Only Labor have the policy in place to ensure that we're fair dinkum about tackling housing affordability in this country.
The government, as we know, continues to dance around the issue of housing affordability while, sadly, a generation of young Australians face the prospect, the real prospect, of being locked out of the housing market. I want to spend some time today, whilst speaking about the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018, to put on the record very clearly and very importantly the concerns on the issue of housing affordability as it pertains to the electorate that I represent in this place, one of the fastest growing places in Australia, the south-west corridor of Brisbane.
The bill we are dealing with today claims to address affordable housing in this country. But, as we know, it does very little to address affordable housing across Australia. Listening to the member for Kingsford Smith, I agree with his sentiments that he just delivered along with the member for McMahon, the Shadow Treasurer, in saying that any housing affordability measure that does not deal with negative gearing or capital gains tax is a sham. These are the facts: overall home ownership in Australia today is at a 60-year low; home ownership rates for people aged between 25 and 34 have collapsed from 52 per cent in 1995 down to 38 per cent a few short years ago; rates of property investments have been at record highs, whilst rates of first home ownership are at record lows. So investment into property is at an all-time high, but actually the rate of first-time home ownership is not the same but—it is going backwards. The great Australian dream of saving up for a deposit, making sure you have found the right block of land and building the home of your dreams is not happening. It is simply not happening.
The number of investors with at least five properties is growing at three times the rate of the group with just one property. Let me say that again. The number of people who own at least five properties is growing at three times the rate of the group with just one property. Over the last 25 years, young people have gone from having to pay just five times to now having to pay up to 15 times their annual income to purchase a new home. But, sadly, we see very little from this government because listening to the ministers responsible, listening to the backbench, listening to members of the government across the board, we just hear the same thing over and over again. They deny that there is anything wrong with the housing market.
The bill does not go to the heart of what is wrong with the property market here in Australia—that being overgenerous tax concessions to people owning their third, fourth and fifth homes, whilst those struggling to simply get into the property market are left the fend for themselves. Sadly, I can say that the government just do not get this. They don't see a problem with house prices continuing to rise and locking out not only young Australians but families and singles who want nothing more than to own their own home. They don't see a problem with homeowners taking on huge amounts of debt just to get into the property market. Indeed, we are now hearing warnings that many young Australians are destined to be so-called 'permanent renters' and forever locked out of the property market. Once a upon a time young people would go along to purchase a house. But now they are not only competing with far more established homeowners but also investors who also enjoy some of the most generous tax concessions in the world. Listening to the debate on this bill, we now know that Australia has the most generous tax concession in the world when it comes to dealing with home ownership and investment properties. But, put simply, as I have said, young people are being forced to fight with one hand tied behind their back when it comes to home ownership.
We know that, if we don't force this government into action, the situation is just simply going to get worse. In the meantime, we're seeing young people take on higher and higher levels of debt that, quite frankly, I think most people in this place and most Australians would understand were unimaginable two decades ago. For those who have been able to buy a home, mortgage debt among 18- to 39-year-olds doubled between 2002 and 2014, jumping from $169,201 to $336,586. This is simply unsustainable and cannot continue, which makes the government's 'raid your own super' scheme all the more crazy. I spoke on that when it came to the House. I said at the time that the government wants more young Australians to take on more debt and more risk to get into the housing market.
Indeed, listening to the reports of the time, the scheme would only see demand for housing increase, pushing prices higher and higher. I have met with and heard from people from the property sector who have agreed with me on that. They think it's a fantastic idea. They think it's good that, overall, the market will be flooded with new people who have raided their super and are trying to get into the housing market. Maybe they've taken $30,000 or $40,000 out of their superannuation, which will have a negative effect when they go to retire. That is going to push house prices up. It's great for the property barons and great for the property industry, but not great for first home owners. A recent report from the Grattan Institute highlighted the following:
Negative gearing has many undesirable consequences. It reduces rates of home ownership. It reduces the availability of long-term rentals. It increases the volatility of housing markets, increasing the risks to the Australian financial system.
The Grattan Institute summed it up best when they said:
The most obvious thing the Commonwealth Government could do is reduce the capital gains discount and abolish negative gearing. It wouldn't solve the problem but it would help.
Everybody seems to get this other than the government.
Once again, I place on record in the parliament a very direct question for the government: what will it take for the Prime Minister and Treasurer to realise that they must follow Labor's lead and act on negative gearing and housing affordability? Who can remember the smoke-and-mirrors trick that they did, saying that if Labor's policy was in it would smash the housing market, that it would destroy the housing market? They knew that that was not true. They knew that that was false. When the government's own advice was released, they had to scurry around and try to pretend that it was something else. Who can remember the Assistant Treasurer at the time, Minister O'Dwyer, saying that it was going to push prices up, and then the Treasurer saying that it was going to push prices down? All along, they were sitting on Treasury advice saying that this was a measure that would help people. They were caught out, absolutely caught out, like with everything in the chaos and dysfunction of this government. They can't seem to get through a week without blowing up internally. They can't seem to get through a week without any policy inconsistency. Over and over again, they chop and change messages all the time—chopping here and chopping there. My issue is that when it comes to the impacts of the indecision and, I guess, chaotic nature of the Turnbull-McCormack government, we're now seeing young home owners paying the price.
I once again say to the government, we on this side of the House represent middle- and working-class Australians. I represent working- and middle-class Australians in the south-west of Brisbane, who are crying out for leadership on this issue. They want to see action, and they don't believe the spin and nonsense that comes from the government with bills such as these that we're debating here today and crazy plans to raid superannuation. Tinkering at the edges with bills like that which we're debating today, looking like you're doing something when it comes to housing affordability, raiding the superannuation accounts of young Australians to increase demand and push up property prices—it's a classic example of the government looking after a tiny section of the community right at the top of the tree.
We've have heard from previous speakers that the Treasurer, when on the topic of housing affordability, said—and who can forget this classic—'You should just get a better job.' Then the Prime Minister of this country, when asked on radio about how to get into the housing market, floated the idea of getting rich parents. I wish this wasn't true. I wish our leaders, who are setting the economic agenda and are controlling the levers, didn't say, 'You know what, the answer to your woes is to get rich parents or maybe get a good job. It's all I can think of.' We're coming up to the budget season. Who could forget those great images of the then Treasurer of Australia chomping down on a cigar, kicking back and having a big laugh. It's a bit like the first budget that came in, with nothing on housing affordability. The then Treasurer cranked up on the night of the budget and said, 'It's the best night of my life,' but delivered the most savage cuts across this country. He was dancing in his office. He thought it was terrific. But we know that, once again, it's another sorry chapter of this government, which seems to be falling apart at the seams.
When I speak to local families and parents in particular, they are really worried about their kids getting into the housing market. I talk to people in suburbs like Springfield, Springfield Lakes, Collingwood Park and Bellbird Park, where terrific new housing is being developed and great infrastructure is being delivered by the Palaszczuk government to service this growing region. I am privileged, as I said in my opening remarks, to represent one of the fastest-growing communities in this nation. Parents genuinely come to me and say, 'Will our daughter or son ever be able to enter the housing market? Will they ever be able to see a clear path to having the great Australian dream, which my parents fought for and worked so hard for, of owning their own home?' I don't know where members of the government are. They're not going to the same shopping centres, post offices or coffee shops that I'm going to where people are simply saying, 'This is getting beyond a joke. This is getting way, way beyond it.' Time and time again, they must be hearing the same message. They're ignoring it. They're choosing not to listen to what the majority of Australians are telling them.
It's been over three years since the government received its financial system inquiry from David Murray. We know that the government established the Murray inquiry with a lot of fanfare and rhetoric. I want to place on record today some of the important findings in the Murray report. They're just collecting dust and remain silent. David Murray put up in big, red flashing lights that negative gearing and capital gains tax concessions are major tax distortions which 'tend to encourage leveraged and speculative investment' in housing and is 'a potential source of systemic risk for the financial system and the economy'. He recommended restoring the prohibition on direct borrowing in superannuation funds because 'further growth in superannuation funds’ direct borrowing would, over time, increase risk in the financial system'. David Murray made it very clear that tax settings for housing encourage leverage and speculative activity because of the asymmetry of housing expenses and the capital gains on housing.
So the government knows that it has been delivered warnings. In response to the report, the Treasurer said:
The biggest decisions Australians make in life—buying a home, providing for our retirement, or starting a business—are all supported by our financial system.
The government has accepted the overwhelming majority of the inquiry's recommendations, but there is no mention of housing, even though the report made direct mention of it and the associated risk that it carries with the current negative gearing settings that this government employs. Quite frankly, it is another classic case of the government just burying its head in the sand.
When you see experts like David Murray, the IMF, the Grattan Institute and the RBA warn the government that there are issues with our tax system and other areas of our financial system that could, over time, generate systematic risks, the government should listen and act. We know that a strong government that delivers in this area with real reform will see an impact that will help young people get into the housing market. That's a conversation that is going on outside of this place. It's a conversation that is happening across the suburbs of this country. I simply say, with respect to the government: start being part of that conversation, listen to what the community says and take real action on housing affordability.
This may sound odd to members who represent the sprawling and expensive cities like Sydney and Melbourne, but Tasmania also is smack bang in the middle of a housing crisis. There is so little affordable housing in Hobart that families are pitching tents on the showground.
Nat Joseph and Kodie Connors, and their four kids who range in age from 10 months to seven years, found themselves homeless when the home they were renting was put up for sale. They'd been renting in Primrose Sands, a lovely but isolated township in the south of my electorate. They simply cannot find anything for less than $380 a week, which is the most they can afford and which is well over half their combined weekly income. Nat is a carer for one of their children who has quadriplegic cerebral palsy and is non-verbal, and Kodie can't find work. Private landlords who used to advertise on Gumtree have dried up. Nat and Kodie have had to try their luck with real estate agents, who have scores of equally desperate people on their books.
The housing crisis is front page news in Tasmania, even pushing the state election off the front page. Last week, Royal Agricultural Society CEO Scott Gadd was photographed at the showground with the cars, vans, tents and trailers in the background. But it wasn't a country show. It was like a scene out of the great depression. But it's 2018, in a country and a state that we are told are enjoying economic sunshine. How can we call ourselves a country of wealth and fairness when families have nowhere to live? The Mercury newspaper reported on some of the people they came across: a couple living in a tent and car with their four children. Just stop to think about that. How have we allowed this to come about? What failures of public policy have we allowed to manifest, that a family with four children in 21st century Australia must shelter in a car? We are a better country than this.
Another man says he lives alone at the grounds, separated from his partner and daughter who'd found a bed in a women's shelter. In Gagebrook, a working-class suburb of my electorate, a modest, even decrepit, Tasmanian housing department home was sold for around $130,000 recently. A rough, back-of-napkin calculation tells me that a $120,000 loan, assuming the buyer had at least $10,000 for a deposit, would cost about $140 a week in repayments. So the investor has snapped this up, and the new owner is renting this home out to a young single mum with kids for $350 a week. Why can't there be a clause that former housing department premises must be reserved for either owner-occupiers or for affordable housing? It wouldn't be a difficult clause I think, and it would help address our housing crisis. The young woman paying $350 a week for that tiny dog-box told a Labor doorknocker recently that she was too afraid to ask for repairs to be made to the property in case she lost the lease—knowing that, despite the relative expense, there would be a line of people willing to take it. And that happens. In Westbury, in the north of my electorate, a woman asked for repairs to be done and, some weeks later when it was time for the lease to be renewed, she was told she'd have to go. The repairs are being made, but she now has nowhere to live. This really is the stuff of Steinbeck and Hugo—tenants at the mercy of avaricious landlords; a take-it-or-leave-it environment, with consumer protections so weak they are laughable.
It's now common to see 30 or 40 people at a rental viewing in Tasmania. People are applying for more than 80 homes and missing out. Rent for a three-bedroom Hobart home increased on average 14 per cent in the past 12 months, putting 8,000 tenants under rental stress. And some now hand over more than 60 per cent of their income to landlords, says Shelter Tasmania. In yesterday's Mercury, the newspaper's editorial noted that six southern Tasmanian suburbs had recorded median price growth of more than 30 per cent over the past year. That's great if you're an investor or looking to use the equity in your home to buy an investment property somewhere else, but it's disastrous if you're trying to buy a home or find somewhere to rent. Having wealth builds wealth, but, for those without, they get further behind. The gap gets bigger, when surely the job of government should be to close the gaps of inequality.
The trend for investment properties to be used for lucrative short-term accommodation such as Airbnb is also contributing to the rental squeeze. The University of Tasmania's Institute for the Study of Social Change found that one in 27 residential properties in Hobart is now listed on Airbnb, up from one in 100 just 18 months ago. When it started, Airbnb was a cute way to list a spare room on the net to rent out to tourists for a bit of cash, but now homes that could and should be used for long-term rentals are being used exclusively as suburban hotels. That's something that I think local and state governments really need to come to grips with, on the grounds of both easing the rental squeeze and ensuring fairness and equity and equality of treatment for hoteliers.
The legislation before us today is part of a federal response to the housing affordability crisis sweeping the country. This bill seeks to pull in the reins on the purchasing power and tax breaks for foreign residents—namely, those individuals who are not Australian residents for taxation purposes. I do welcome these changes, as I welcome the capital gains tax incentive for investment in affordable housing, where, from 1 January, an investor will be able to claim a 60 per cent CGT discount if they invest in affordable housing. I don't think these measures will do much more than scratch the surface, but they're a step in the right direction. Labor are not opposing the bills; rather, we'd like the House to note that, once again, the government is proposing a measure to supposedly address the housing crisis while not addressing the elephant in the room: negative gearing—a major economic distortion, as my colleague the member for Oxley just mentioned.
This government is hamstrung on policy because it doesn't want to upset people who regard property ownership in Australia as, first and foremost, an investment opportunity instead of, first and foremost, a human right to shelter—a place to live. Too often now, we seen cashed-up investors who already own multiple properties swamping auctions and pushing out hopeful first home buyers and owner-occupiers. It's the market at work at its most brutal. Those with the most money win, and it demonstrates why we need a government committed to acting in the best interests of all Australians, not just the best interests of wealthy Australians. Labor is recommending the bills go to the Senate for a full review to see whether these moves will actually improve the crisis in regional areas like much of my electorate. Affordable housing and, indeed, even available housing is increasingly an issue across regional communities. I could go into a long debate about the links between the housing crisis and the growing insecurity of work, but we'll leave that for another time.
Labor always leads the debate on housing affordability. Only Labor has a comprehensive policy to tackle the crisis that has been building across our country and which the government has been too mud-footed to deal with. Labor's plan is good for housing affordability, good for jobs, good for the budget and good for productivity. Labor's package will see the construction of more than 55,000 new homes over three years and boost employment by 25,000 new jobs a year. Labor will further help level the playing field between first home buyers and property speculators by doubling the screening fees on foreign investment and financial penalties that apply to foreign investment in residential real estate.
On the Prime Minister's watch, the great Australian dream of homeownership has turned into a nightmare. For years, this government has ignored the warnings to act on unfair and discretionary housing tax concessions and on the risks associated with increased borrowing in superannuation funds. It has simply failed to act. The Liberals' cuts to the National Rental Affordability Scheme and abolition of the Housing Help for Seniors pilot, the National Housing Supply Council and the First Home Saver Account Scheme have just made matters worse.
Closer to home, in my home state of Tasmania, the Rebecca White Tasmanian Labor team, if elected on Saturday, also has a strong plan ready to go. Tasmanian Labor has announced a $106 million housing affordability package which will assist people who are struggling to break into the rental and home ownership markets. This policy will assist 12,800 people over six years through the building of new properties and upgrading of existing public housing. Tasmanian Labor knows that for people to fully participate in our society, having secure accommodation that is affordable is absolutely necessary. This is not just about building new houses. This is about addressing the housing crisis, which requires more than bricks and mortar. There will be a particular focus on lower socioeconomic areas and people aged between 18 and 25 and aged over 55. This will help the constituents I talked about earlier. Under this plan, 900 new homes are to be built, with 433 to be completed within two years; 75 new homes are to be built in regional areas; three multiresidential developments are to be built around the state, totalling 90 units; and two youth emergency accommodation facilities are to be built in the north and north-west. The HomeShare program, which reduces home deposits, is to be expanded, and more public housing stock is to be sold. Tasmanian Council of Social Services chief executive Kym Goodes said having a safe, secure place to live is 'the most basic human right' and the state needs substantial long-term investment in affordable housing. She says Labor's policy will establish Tasmania as a national leader in targeting youth crisis accommodation, noting an increased demand for teenagers aged 13 to 16 needing a place to stay and support.
What we've seen from this government is absolutely nothing, really, on housing affordability. What we've seen from this government is a view that housing is really all about the private market, about private investment, about making money and about being cashed up. What we haven't seen from this government is action to make sure that housing is available for people who need it most: people who are poor, people who are elderly, and women and families escaping domestic violence. Where's the housing for them? They are just left bereft, and this government has no answers. It's tinkering around the edges, I fear, with the measures before the House today. Labor won't stand in the way of them, but we really don't think they'll do all that much. We've got a solid plan to go forward, if we win the next election, to deal with negative gearing, to deal with the distortions in the market, to push the investors out of the way, to let first home buyers and owner-occupiers back into the game and to give them a fair crack at the great Australian dream of owning your own home.
It's a pleasure to follow the previous speaker on the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018. I think where he finished is where I would start. This is a crisis in this nation that affects people, and in this place we can often get lost in the numbers. The numbers are profound. We are now right at the top—it's not a competition we want to win, but we're right at the top—in the world now as one of the most expensive places to buy a house or rent a house. That's not where we want to be. That's not what good policy should be seeking to achieve.
We've seen change in just a generation. It used to take about four or five times an average weekly wage to get an average kind of home—that's been fairly steady, with a few ups and downs, for many decades. That's grown out of control in the last couple of decades. In Melbourne and Sydney, for example, you need between 10 and 12 times an average weekly wage just to have a crack at getting an average foothold in the housing market. It's not a situation which we should be relaxed and comfortable about, to borrow John Howard's ridiculous phrase. His aspiration for the nation was to be relaxed and comfortable—what a silly aspiration for a nation! The current Prime Minister's aspiration for the nation seems to be an Australia where he's the Prime Minister forever and his rich mates pay a bit less tax. That's pretty much the extent of it.
The other aspects of the numbers are instructive. We have 195,000 people right now across Australia on social housing waiting lists. None of the bills that the government's putting forward do anything about that. We had 288,000 people in 2017 presented to homelessness services. That is 288,000 Australians seeking help in one year. They're people, not numbers.
In response to this crisis, we were told in the lead-up to the budget—remember the headlines?—we were going to have housing as a centrepiece of the budget. It was going to be fantastic. We were finally going to confront this crisis. That lasted for about two weeks and then kind of fizzed away. I think Paul Keating's comment on the Prime Minister is apt: he's a fizzer. Big red firecracker, light it up, off it goes and then nothing.
In response to that, we have no minister, no plan and a series of teeny tiny bills scattered around the Notice Paper. If you brought them forward together, maybe it would look a little bit more like a package then, but instead I think the political strategy is to have a whole bunch of do-not-much and do-nothing bills scattered around with 'housing' in the title, creating the illusion of activity, because, if you say 'housing' in the title of a bill, maybe someone will think you're taking the crisis seriously and doing something.
The other aspect of the strategy, as we hear from government speakers on these teeny tiny bills every now and again when they pop up, is to blame the states. It's all the states' fault, you see, because they haven't put enough money in here or it's a supply problem. We haven't got enough land supply; that's the problem one week. But that is a nonsense. As we know, housing is a market. There is a housing market. There's clearly a role for government, particularly at the crisis end, for people who are desperately poor and need a house to live in. Shelter over their heads is kind of important in the scheme of things.
But there's also supply and demand in a market. Yes, there should be a focus on supply. Most of that—not all of it but most—is largely within the province of the states making sure there are enough new development sites on the edges of cities and in established areas to build houses on. That's fine. But there's also demand and, whichever way you look at it, the big levers of demand are in the Commonwealth's control. They just point-blank refuse to own up to that or do anything about it. I say to the government: every time you bring forward one of your silly little do-nothing bills that don't really address the problem with housing in the title, we will stand up, we will speak up and we will call you out for the lack of action.
Some measures in the government's little do-nothing bills are actually harmful—for example, the 'raid your own superannuation' one. Apart from the fact that it distorts the purpose of superannuation in this country, which is to provide for a decent retirement, not to get you a house to live in when you're young, all economists—but they're just economists who study these things; the government are a bunch of geniuses, of course, who know best on most matters, particularly when they don't like looking at expert evidence—say that's kind of a dumb thing to do if housing's unaffordable, because you just put more fuel on the fire. You push up prices by adding to demand and bringing more cash in.
From our point of view, most of the government's budget measures do very little. That one, as we've spoken about, is downright harmful but comes on the top of the quite offensive set of statements that we've heard from the government like 'Get rich parents.' Particularly in the major capital cities, as I've said, if housing now is 10 to 11 times average weekly earnings just to have a crack, you probably do need rich parents to get your $100,000 or $200,000 for a deposit so you can have a crack at borrowing the rest. That's if you're not in the casualised workforce which the government is hell-bent on accelerating in its own workforce of the Public Service, as we're now learning, but also more broadly. You can't get a loan. Funnily enough, if you're a casual worker for 13 years, you can't actually get a bank loan to have a crack at buying a house even if you've got rich parents to give you the deposit. Or everyone could get a $200,000 job. You could get a much better paying job and then you could have a house. We heard in the last few weeks the third leg of the three-legged stool—remember we had trilemmas and three-legged stools last year for a little while on energy policy. The third leg of the housing policy is, 'Get rich mates.' If you haven't got rich mates or you can't get a great big pay rise, that is another option. You could get a rich mate to just give you a house.
I want to make a couple of remarks on negative gearing and capital gains tax. Again, we've said we'll stand up, we'll speak up, we'll call this out every time they bring forward a nothing bill. The fact is that the current combination of negative gearing and capital gains tax exemptions fuel demand for housing. I don't think that's a controversial statement. But that's for a few reasons. Partly it's a terrible, ridiculous and unproductive use of capital. If you're a high-income earner in this country, the most rational thing to do on a Saturday is wander down the street, find an auction and bid up the cost of an existing house. You can outbid a first home buyer because you get a great big tax kick from the Australian government. The people who need it least, as usual with this government, get the most.
We hear a lot about investment at the moment. I would think that it's not a difficult thing to see that that is an unproductive use of capital. Bidding up the cost of an existing house is not actually where we want spare capital from high-income earners or those with cash in their pockets to be putting it. I'm old fashioned on this. Housing is for people to live in. Housing isn't supposed to be the preferred investment vehicle or a class of investment in the country. It's completely unproductive. I'd rather see a tax system that encourages people with a bit of spare money to invest in the share market or invest in businesses or invest in something that might grow the economy and grow jobs. Who knew? It's a very pro-business statement, I know.
But as we've also heard, the current tax concessions are enormously regressive. Overwhelmingly, the benefit goes to those who have most, the top 20 per cent of income earners, people already with capital and wealth. As usual with this government, they get the big kick along and the benefit. Every few weeks when this comes up in question time, we hear about the nurse and how somehow apparently we on this side hate nurses because we want to refocus the nurse investor. Again, it's a smokescreen and a distraction.
My mum was a nurse. I have a lot of time for nurses. I love nurses. And good on anyone who wants to have a crack at getting into the market. But the data is clear that the overwhelming benefit goes to those who have most. Strip it back, that is the entire point of the Liberal Party. We know this. They're the party of wealth and capital. Own it, be up-front about it, as you are with multinational tax cuts.
The other things you have to call out about the negative gearing and capital gains tax cuts is they're expensive. We've heard a lot about debt and deficit, structural budget repair and the budget emergency. Apparently the budget emergency doesn't apply if you want to give yourselves a tax cut. Everyone earning over $180,000 in the country got a tax cut last time—no budget emergency there! There were $65.4 billion of big business tax cuts—no budget emergency there! It is entirely unclear how that will be paid for because all the pain appears in the out years. It is in years 7, 8, 9 and 10 that it really ramps up. It's only an emergency for those on welfare and for the most vulnerable people in the country so the budget emergency doesn't apply to everybody.
It is a good thing to do from a structural budget repair point of view to refocus the tax concessions. They're enormously expensive. We hear a lot about how Labor wants to abolish negative gearing and capital gains tax. That is not true. That is not our policy. Our policy is to refocus those concessions and put them to work so that you can still negatively gear and you can still have that big capital gains tax deduction on new housing. What that would do is put negative gearing to work and back to the original point of it, which was to help encourage new supply in the market. For the government that thinks it's all about supply and pretends demand doesn't exist, that would be a sensible thing to do as well. People who want to invest in the housing market could get a tax deduction because they're building new houses, bringing new supply on and putting downwards pressure on prices. That is a good thing. That is our policy.
Labor would do a positive thing for the budget over 10 years, particularly in the out years; we'd return a lot of money to the budget in a progressive way. It wouldn't hurt those who have least. It would moderate the damaging price rises we've seen. No sensible society in the world, you would think, wants to see house prices going like that. Let the Hansard say my hand went straight up in the air because that's the nature of the curve in the last couple of decades. You might want house prices to go up. They go up and down by a few per cent in a normal market environment—sometimes they go down a bit and sometimes they go up a bit. That's okay. You can have house prices going up roughly in line with inflation but you don't want to see house prices go up by five and 10 per cent year on year. That's a nonsense. It is completely distorting to the economy and it locks ordinary people out.
We hear a lot about Menzies. We had the 75th anniversary of his seminal Forgotten People speech last year—it was a big moment. He had a vision for the country as a nation of home owners. St Menzies would be appalled seeing the current Liberal Party. A nation of landlords and renters is their vision. That is unsurprising, as I said, from the party of wealth and capital.
We have a sensible plan to address the nation's housing crisis. Ultimately, it should come down to the fact that it should not be easier for someone to buy their 17th investment property with a great big kick along from the Australian government: 'Well done you. You've already got everything; let's give you a little bit more.' It should not be easier. Our housing policies should not be set up like that at the expense of people who have no chance of getting into the market.
Bringing this back together: as I said, we'll stand up every time you bring forward a nonsensical little teeny-tiny measure and pretend that it's going to do something about the housing crisis in this country. If the government were serious they would understand that we live in a cooperative federal environment, that no level of government can deal with the housing crisis alone, that you have to have cooperation between the Commonwealth government and the states and indeed local governments, particularly with the planning and development levers that they control in housing approvals. You have to actually sit down and have a national conversation and a plan. What do we have from the government? There's no minister for housing. They roll out muppet 1 or muppet 2 or muppet 3 every now and again, saying something on it, but there is no minister for housing. That's a disgrace.
We just saw one of the other silly measures, in the other chamber, about the national agreements. They're going to impose, as part of their housing policy, a requirement on the states to have a housing strategy.
An honourable member interjecting—
They're going to impose a requirement on the states to have a housing strategy.
An honourable member interjecting—
Sure, that is reasonable, but there is no Commonwealth housing strategy. You say to the states: 'You have to have a housing strategy, but we don't. We don't have a housing strategy. We have no coherent plan. We'll just come and pick off little bits and pieces. Meanwhile, let the system rip.' Those who have most can keep milking the taxpayer through tax deductions that are clearly unsustainable.
Labor senators in a number of the Senate inquiries have included the radical recommendation that the government get a housing strategy.
An honourable member: That's socialist!
Apparently that's socialist—we hear the assistant minister telling us—despite the overwhelming evidence from every expert that it would be a good thing to have a housing strategy to guide your policy, instead of little bits-and-pieces initiatives to make people think that you're doing something.
In closing, I again remind the government that it's not actually a socialist policy plot to say, 'Hey, those big tax concessions need to be reformed.' Indeed, it's a position the Prime Minister used to hold and articulate publicly—you know, him. We had a question yesterday in question time about policy consistency. If you noticed, we laughed, but we're all decrying it. Which inconsistency do we mean? We could talk about the republic, climate change, negative gearing—that's certainly up there. The IMF, the International Monetary Fund, only in the last week, said:
The capital gains discounts on housing should be reduced and other tax incentives limited.
The OECD says that. The government's own Financial System Inquiry said that. So did the Grattan Institute and ACOSS—we could dismiss them because they're worried about poor people; we don't want to know about them! The Australian Institute of Company Directors and the Treasury, the government's own Treasury, said, 'Fix your unsustainable tax concessions.' For every stupid bill you bring forward, we'll keep saying the same thing. Hopefully, we'll win the election, and then we'll do something about housing.
It was interesting listening to that last contribution from a member who is going to vote to support the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018, this 'stupid', 'silly' bill. He's going to vote to support it, and we welcome his support. I'll very happily see him raising his hand in the chamber supporting this bill. For those listening on Hansard, you might not have picked that up from his contribution, but he will vote for the bill. He supports this bill because it is a great piece of legislation.
As we've said since last year's budget, the government recognise the importance of additional investment to meet Australia's needs for more-affordable housing, as well as making it easier for all other Australians to get into the housing market. Housing, as we all know, is important to the wellbeing of Australians, and access to secure and affordable housing can improve social and economic participation, education and health outcomes.
This bill represents an important step in ensuring that Australians have access to secure and more-affordable housing, while continuing to strengthen the integrity of Australia's tax system. It follows the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017, which have already been introduced into parliament to give effect to a number of measures that will support housing affordability for all Australians and were announced in last year's budget.
Specifically, this bill implements measures to improve housing affordability, encourage investment in affordable rental housing and, at the same time, as I said, improve the integrity of the tax system. In particular, schedule 1 to this bill delivers on the government's commitment to implement tighter rules for foreign residents owning Australian property, schedule 2 contains a technical amendment to support changes to streamline the foreign investment framework and schedule 3 delivers on the government's commitment to introduce tax incentives to boost investment in affordable housing, importantly, to create the right incentives and, ultimately, to improve outcomes for those in need.
The schedule 1 reforms, announced as part of the 2017-18 budget, to improve tax integrity and reduce pressure on housing affordability do so by strengthening the capital gains tax rules on foreign tax residents, in particular, by denying foreign residents access to the main residence capital gains tax exemption and addressing an integrity issue with the capital gains tax rules for indirect interests in Australian real property by modifying the principal asset test. These two reforms were announced alongside an expansion of the foreign resident capital gains tax withholding regime, which has already been legislated and came into effect last year, on 1 July 2017. Schedule 2 to this bill contains technical amendments that introduce a reconciliation fee on developers for dwellings sold to foreign persons under a near-new-dwelling exemption certificate. The near-new-dwelling exemption certificate was introduced through regulatory amendments that took effect from 24 June last year. Schedule 3 to this bill allows resident investors in qualifying affordable rental housing to obtain a capital gains tax discount of up to 60 per cent for those investments. The changes will provide this additional 10 per cent capital gains tax discount for investments in affordable rental housing and will increase the available capital gains tax discount from 50 per cent at present to 60 per cent for those investing in qualifying affordable housing investments, ultimately with the intention of encouraging more investment into affordable rental housing, which the sector has really been calling for.
I thank, in particular, all of the stakeholder groups, the community housing providers, other peak bodies and interested parties that contributed to the consultation on the draft legislation for these measures. Full details of the measures can obviously been found in the explanatory memorandum. I commend this bill to the House.
Question agreed to.
Bill read a second time.
Ordered that this bill be reported to the House without amendment.